Bank Kredit Svis has been followed by numerous scandals, and now it has experienced a collapse.
Share price of Credit Suisse yesterday, at one point it fell by as much as 30 percent, after the bank’s largest creditor, the Saudi National Bank, announced that it was no longer able to provide it with financial assistance because it would exceed the legal limit of ownership share up to 10 percent. Last year, that bank participated in the recapitalization of Credit Suisse, worth 4.2 billion dollars, achieving an ownership share of 9.9 percent.
Credit Suisse announced last night that it will borrow up to 50 billion Swiss francs from the Swiss National Bankto reassure investors that it has the cash it needs to continue operating.
“This additional liquidity would support the core business and clients of Credit Suisse, as the bank takes the necessary steps to restructure its operations to create a simpler and more focused bank built around the needs of its clients,” the bank said. The news affected financial markets around the world, and the fear of a banking crisis spread throughout Europe. But this is not the first time that the Swiss giant is in big trouble.
Data leak
Details of more than 18,000 accounts in one of the world‘s largest private banks were revealed in February an extensive list of clients involved in torture, drug trafficking, human rights violations and other serious crimes. In these accounts in one of the most famous financial institutions in Switzerland, Credit Suisse Bank, there are more than 100 billion Swiss francs, the Guardian reported.
The leak points to “widespread failings by Credit Suisse, despite repeated promises over a decade that it would remove suspicious clients and illegal assets“, states the British newspaper, which is part of a consortium of 48 media outlets that have been granted exclusive access to the data.
The analysis reveals that Kredit Svis continuously opened or maintained bank accounts for numerous high-risk clients around the world. Among them are a human trafficker in the Philippines, the head of the stock exchange in Hong Kong imprisoned for bribery, the billionaire who ordered the assassination of his Lebanese pop star girlfriend and the executives who robbed Venezuela’s state-owned oil companyas well as corrupt politicians from Egypt to Ukraine.
The information was originally given to the German newspaper Zidojce Zeitung revealed by an anonymous whistleblower, who said Swiss banking laws were immoral. The newspaper then teamed up with many media outlets around the world to investigate data on tens of thousands of accounts, some dating back to the 1940s and more than two-thirds dating back to 2000. Many accounts are still active today. The bank said it “strongly rejects” the allegations against it, claiming that reporting based on “selective information taken out of context, resulting in biased interpretations of the bank’s operations.”
But the data leak is far from the only scandal to hit the financial institution in recent years. “The Week” takes a look at some of the biggest controversies the Swiss bank has had to overcome.
1. The president of the bank resigned due to violation of covid rules
Antonio Horta-Osorio resigned as chairman of Credit Suisse on January 17, 2022 after “repeated violations” of pandemic restrictions, less than a year after taking up the role. An investigation by the bank’s board of directors revealed that Horta-Osorio, former chief executive of Lloyds Banking Group, violated the quarantine rules on several occasions“including a trip to London last year to watch the Wimbledon final,” writes the Financial Times.
His departure was “serious embarrassment” for Credit Suisse, which hired a Portuguese banker to “help redefine strategy” after the previous ones scandals “damaged the bank’s reputation for risk management and raised questions about its leadership“, the paper states. Credit Suisse immediately appointed board member Aksel Leman as the new president, who was at the head of the bank just five weeks before the huge data leak, the Guardian writes.
2. Scandal with bonds
The Swiss bank was fined almost £350m by global regulators in October 2021 after it pleads guilty to fraud in long-running scandal that plunged Mozambique ‘into financial crisis’, writes the Guardian. The so-called “tuna scandal” arose from loans worth $1.3 billion arranged by Credit Suisse to the Republic of Mozambique between 2012 and 2016, allegedly aimed at “government-sponsored investment schemes, including maritime security projects and the state’s tuna fishery.”
But part of the funds disappeared, the paper said, and it was later revealed that one of the contractors in Mozambique had secretly arranged hefty kickbacks “worth at least $137 million, including $50 million to Credit Suisse bankers who were supposed to provide cheaper loans,” regulators found.
The international fraud then led to the International Monetary Fund suspending aid to Mozambique, ultimately triggering the country’s financial crisis.
3. Collapse of the fund
The bank lost $5.5 billion when Archegos Capital Management failed in early 2021. Big US Hedge Fund Investments “in certain technology stocks underperformed and the value of his Credit Suisse portfolio plummeted,” explained Reuters.
An independent report on the bank’s involvement in a risky hedge fund criticized the bank’s conduct and determined that its losses were the result of a fundamental failure of management and control in its investment bankand, in particular, its main brokerage division.
4. Corporate espionage
The former executive director of the bank Tidjane Thiam was forced to leave the bank in March 2020 after an investigation revealed she had spied on two of its employees. The bank hired private detectives to track Iqbal Khan, the former head of wealth management, who left for arch-rival UBS, and Peter Goerke, the former head of human resources.
Credit Suisse played down the spying allegations, but last October the Swiss financial market watchdog (FINMA) said the bank planned to spy on “seven occasions between 2016 and 2019 and carried out most of them”.
5. Violation of US sanctions
Credit Suisse was fined $536 million in 2009 for violating US sanctions against Iran and several other countries, including Libya, Sudan, Burma and Cuba, between 1995 and 2007. The US Department of Justice said the bank made payments that gave those countries access to US financial institutions – a practice Washington has banned, Deutsche Welle explains.
It was the largest such fine in the history of US sanctions violations and, had the bank not cooperated, authorities said it would have had to pay even more.
6. Helping
In 1995, Credit Suisse was among the Swiss banks that ordered to return nearly half a billion dollars stored in the accounts of Philippine dictator Ferdinand Marcos. These are funds that the Philippines said were stolen from the national treasury, the Associated Press reported at the time.
It was later revealed that Credit Suisse had opened accounts for him and his wife under the names “William Saunders” and “Jane Ryan”, which helped protect their funds from scrutiny.
(WORLD)